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Vince Cable calls for details of FSA’s stress testing

Liberal Democrat Shadow Chancellor Vince Cable has written to the FSA demanding that it release details of how it is stress testing banks’ capital.

In the letter to FSA chairman Lord Adair Turner, Cable says the lack of transparency is undermining confidence in the sector.

He says: “With the US authorities publishing detailed information today I would ask that the FSA publishes as much of the detail of the stress tests as possible.

“In my opinion this should include the methodology which it employs and the results of its tests against the benchmarks employed and detailed information on the scenario inputs.”

Cable says testing standards are inconsistent, with mutual building societies subject to much greater discipline than the banks.

He is also calling for the FSA to set out the protocol it follows when releasing stress test results to the market.

He says: “I was very surprised to see on March 27 that the results of Barclays’ stress test were released not by the FSA but by the bank itself to favoured journalists. I have seen no comment by the FSA indicating any disapproval or sanctions for what appears to be highly irregular behaviour. Could you clarify the position?”

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